Standoff in a Philippines casino shows risks of SPACs betting on foreign targets

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Amid a crumbling SPAC market, nearly 600 blank check companies are still looking for acquisition targets, with deadlines rapidly approaching. SPAC sponsors are highly motivated to find targets, and as competition heats up in domestic markets, they have increasingly turned abroad.

As some SPACs have discovered, due diligence can be harder when conducting transactions overseas.

SpringOwl Asset Management’s SPAC 26 Capital Acquisition (ADER) has found itself in the midst of a bizarre saga with pending merger Okada Manila, a Philippine casino resort it valued at $2.6 billion when the agreement was struck last October. In mid-June, weeks before SPAC shareholders were set to vote on the proposed merger, the company reported that the property had been seized by the company’s former Chairman and CEO, 79-year-old Japanese casino tycoon Kazuo Okada, along with former director Antonio “Tonyboy” Cojuangco and about 50 Filipino police officers and private security guards, who "illegally and violently entered and occupied OKADA Manila premises."

Kazuo Okada had been ousted by the resort company’s board in 2017 after alleged misuse of funds. While the Japanese Supreme court effectively sided with the board in determining that his removal was valid, in April 2022 the Philippine Supreme Court issued a status quote ante order which restored Okada as Chairman and CEO as it reviews the case. In connection with the “hostile takeover,” the target company’s board filed criminal charges, including kidnapping, against Mr. Okada. However, it remains uncertain when this issue will be resolved, and whether the SPAC’s shareholders would vote to approve the acquisition of an asset that the seller does not control (the vote date is now TBD).

Luckily for SPAC shareholders, the casino’s seizure occurred before the SPAC completed its acquisition; ADER’s common stock last closed at $9.81, and shareholders still have the right to redeem their $10 pro rata trust value if the proposal moves to a vote or if the SPAC liquidates.

As more SPACs approach their termination dates, sponsors may begin targeting companies outside of their geographical focus or area of expertise; however, this episode underscores the need for investors and companies alike to thoroughly vet potential merger targets, and highlights jurisdictional risks with legal battles abroad.


The saga echoes that of British chip designer Arm, a 2022 IPO candidate, and its Chinese joint venture. In 2020, Arm’s board of directors voted to oust the CEO of Arm China, Allen Wu. However, Wu refused to step down, kept control of the corporate seals, hired security guards to keep out parent company representatives, and began operating it as an independent company. In April 2022, Arm appeared to have officially wrested control from him.